Presentation on theme: "All companies have products which pass through different stages of their life cycles. After the product reaches the last stage of the life cycle, called."— Presentation transcript:
All companies have products which pass through different stages of their life cycles. After the product reaches the last stage of the life cycle, called the declining stage in one country, it is important for the company to identify a few other countries where the whole life cycle stages could be encashed. For example, Enfield India reached maturity and the declining stage in India for the 350 cc Royal Enfield motorcycle. The company entered Kenya, West Indies, Mauritius and other destinations where the heavy engine two wheeler became popular. The Suzuki 800 cc vehicle reached the last stage of its life cycle in Japan, and entered India in the early 1980’s, where it is still doing good business today. Individual Company Perspective
Even if companies expand their business at home, they may still look overseas for new markets and better prospects. Arvind Mills expanded their business by either setting up units or opening warehouses abroad. Ranbaxy’s growth is mainly attributed to geographic expansion every year to new territories.
Individual Company Perspective The younger generation of business families has considerable international exposure. They are willing to take risks and challenges and also create opportunity for their business. Laxmi Mittal has emerged as the steel king of the world and Vijay Mallya of the UB Group took a major risk in setting up operations in South Africa.
Individual Company Perspective Every corporate in the country has strategic plans to multiply its sales turnover. In case some of the ventures fail, others will offset the losses because of multi-locational operations. For example Coca Cola is not doing well in a number of countries. But this will not affect the company because more than a hundred countries are contributing to offset the losses.
Individual Company Perspective Some companies have outstanding technology through which they enjoy core competency. There is a need for such technology in all countries. Biocon, Infosys and Gharda Chemicals are known for their core competency in bio-technology, IT and pesticides respectively and a huge demand exists throughout the world for their technology.
Individual Company Perspective Prior to profits and revenue generation, many companies first build their corporate image abroad. Once the image is built up, generating revenue is a comparatively easy task. Samsung and LG built their image in India for the first three years and generation of revenue and profits has been considerable as they have expanded to semi-urban and rural India as well.
Individual Company Perspective Companies, which are involved in international business, enjoy fiscal, physical and infrastructural incentives while they set up business in the host country. The Aditya Birla group enjoyed such incentives in Thailand and Indonesia. The home country may also offer many incentives in order to neutralize the cost and allow the country to compete in the world market. In the case of normal exports, companies get duty drawback, advance licences etc.
Individual Company Perspective Many companies have a highly productive labour force. Their unique skills may not be available throughout the world. Manufacturing units in India have consistently performed well, whether in the diamond industry, or in the field of handicraft or wood work or leather. Companies nurture the skills of the artisans and win world markets.
Individual Company Perspective Many companies have entered into business abroad, seeing unlimited opportunities. Health care companies like Cipla, Dr. Reddy, Cadilla and Aurobindo Pharma entered into South American countries like Brazil and Argentina.
Government Perspective Foreign exchange is necessary to balance the payments for imports. India imports crude oil, defence equipment, essential raw materials and medical equipment for which the payments have to be made in foreign exchange. If the exports are high and the imports are low it indicates a surplus balance of payment. On the other hand if the imports are high and the exports are low it indicates an adverse balance of payment, which all economies would want to avoid.
Government Perspective From time immemorial, nations have depended on each other. Even during the era of Indus Valley civilization, Egypt and the Indus Valley depended on each other for various items. Toady, India depends on the gulf regions for crude oil and in turn the Gulf region depends on India for tea, rice etc. Developed countries depend on developing countries for primary goods, whereas developing countries depend on developed countries for value added finished products.
Government Perspective The theories of absolute advantage, comparative advantage and competitive advantage, which have been propounded by classical economists, indicate that a few nations have certain advantages of resources. Such resources allow them to be competitive. These resources may be in the form of labour or infrastructure or technology or even a proactive policy of the government.
Government Perspective Diplomacy and trade always go hand in hand. Many sovereign nations send their diplomatic representatives to other countries with a motive of promoting trade besides maintaining cordial relations. Indian diplomats in Latin America have done a remarkable job of promoting India’s business in the 1990s.
Government Perspective Many countries are endowed with resources, which are produced at an optimum level. Such countries can compete well anywhere in the world. Rubber products from Malaysia, knitwear from India, rice from Thailand and wool from Australia are a few illustrations.
Government Perspective Over the years all countries have invested huge amounts of money on infrastructure by building airports, sea ports, economic zones and inland container terminals. If the trade activities do not increase, the country cannot recover the amounts invested. Hence, the government fixes targets for every infrastructure unit and time frame to achieve them. Economies like Mauritius, Hong Kong, Singapore, Malta and Cyprus invest in trade related infrastructure in order to elevate themselves to be foreign trade oriented economies.
Government Perspective A new era has emerged from conquering countries by sword to winning by trade. A businessman gives priority to the image of the country he belongs to. We come across products with labels such as ‘made in China’, ‘made in India’ and ‘made in Japan’. Businessmen from India, China and Japan bring credentials to their country while citizens achieve business success elsewhere in the world.
Government Perspective All developing countries announce their trade policies. A clear cut road map is drafted and given to promotional bodies so that timely implementation is possible. Every trade policy in India, in the past had its agenda and action plans right from Import Control Order 1947.
Government Perspective The apex body of world trade, the World Trade Organization (WTO), a free, transparent and regulatory body upholds provisions related to elimination of tariffs and non-tariff barriers.